global ehs auditing benchmark survey 2015

GLOBAL EHS AUDITING

BENCHMARK SURVEY 2016

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GLOBAL EHS AUDITING

BENCHMARK SURVEY 2016

Paul Beatley, Director

Enhesa

Mark Kozeal, Commercial Director of Product Management (EHS Division)

Bloomberg BNA

Compliance is our Business. Enhesa is the

market leader in global environmental, health and

safety assurance providing support to businesses

worldwide.

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EXPERT ANALYSIS.

4

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©2015 Enhesa. All rights reserved.

5

Today’s Presenters


Paul BeatleyDirector;

Enhesa

Mark KozealCommercial

Director of Product

Management;

Bloomberg BNA

(EHS Division)

Global EHS Auditing

Benchmarking

Survey:

Webinar Agenda

• Survey overview

• Major changes from 2013 survey

• Deep dive into the survey results

– Before the Audit

– During the Audit

– After the Audit

• Key takeaways

6

7

Global EHS Auditing Benchmark Report:

Introduction

Survey by

Enhesa and

Bloomberg BNA,

in cooperation

with the Auditing

Roundtable

2015 survey

conducted:

February 13 –

March 13, 2015

83% of survey respondents

currently audit

2015 survey

respondents:

487 (+77% over

2013)

First survey published in 2013

aimed to:

• Measure how businesses monitor,

assess, execute and modify their

EHS auditing programs

Key findings addressed:

• Issues related to audit programs, self

assessments, budgets, audit frequencies

• Leading factors for audits

• Structure and standards used when auditing

• Auditor challenges

17% of survey respondents

plan to begin auditing in 1-3

years


8

2015 Survey Respondents: Industry Represented


Manufacturing industry57%

37%Non-manufacturing business

Chemicals

14% Utilities

7%Non-business

(government, healthcare)

6%

Bloomberg BNA/Enhesa Corporate Auditing Survey

9

31%

17%

8%

17%

10%

16%18%

12% 11%

21%18%

20%

FEWER THAN 250

250-999 1,000-2,499 2,500-9,999 10,000-24,999 25,000 OR MORE

2015 2013

% of Respondents by Organization Size

Number of Employees

©2015 Enhesa. All rights reserved. Bloomberg BNA/Enhesa Corporate Auditing Survey

10

Auditing Since 2000

Results show steady growth in # of respondents auditing

50%

in the last 15 years

30%

in the last 10 years

13%

In the last 5 years


Global EHS Auditing

Benchmarking

Survey:

Changes since 2013

11

• Locations of HQs

• Topics included in audits

• Auditor certification

• Etc.

12

More Representative of Industry in a Globalized Economy

Increase in number of respondents in various regions

North America

2013: 84%

2015: 67%

17%

Latin America

2013: 0.7%

2015: 2%

1.3%

Africa/Middle East

2013: 0.4%

2015: 3%

2.6%

Europe

2013: 13%

2015: 17%

4%Asia Pacific

2013: 2%

2015: 10%

8%

Bloomberg BNA/Enhesa Corporate Auditing Survey©2015 Enhesa. All rights reserved.

13

Since 2013, the survey results show an increase in….


Topics included in auditsUse of third-party

consultancies

Auditing experience

required

Auditor certification

required

Use of

commercial/customized

protocols growing

More gradual information

about audits in foreign

countries


14

Topics Included in Audits

78% 80% 82% 84% 86% 88% 90% 92% 94% 96%

2015 2013

Safety

Environment


15

“Special” topics Included in Audits


0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

CSR

Quality

Producer Responsibility

Energy Efficiency

Transportation

Security

2015 2013


16

Basis for Audits


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Corporate EHSstandards

National, locallaws, regulations

U.S. regulatoryrequirements

Permitrequirements

General industrystandards

EU regulatoryrequirements

% i

nc

lud

ed

to

pic

s in

au

dit

Topics Included in audit

2013

2015


17

What Do You Use to Perform Audits?


Corporate EHS

protocol developed

by Company

83%

Custom protocol

developed by consultancy

24%

Local protocols 23%

Off-the-shelf protocol

developed by vendors

24%

Corporate EHS

protocol developed

by Company

59%

Custom protocol

developed by consultancy

Or

Off-the-shelf protocol

developed by vendors

(Combined in 2013)

15%

Some combination ~25%

20132015


Deep-dive into Survey

Results:

Before the Audit

• Audit plans

• Goals

• Budgets

18

19

Where the Auditing Function is Housed

Survey says…

43%

Combined

EHS

14%

Health &

Safety

9%

Legal

9%

Environment

22%

Other*Other departments included Risk Management,

Audit, HR and Finance


20

Who is Responsible for Managing? Scheduling?


74%Corporate

Office

13%Regional

Office

13%Local

Facility


21

Factors Leading to the Decision to Audit


91%

62%

49%46%

37%

7%

3%

9%

96%

80%

47%

80%

44%

12%

24%

29%

CorporateRequirements

National lawsand regulations

ISO 14001, ISO9000

Regional (state,prov., territorial,

local, mun.reqs.)

ISO 18001 orother EMS

requirement

EMASrecognition

Court imposedobligation

Other

2015

2013


22

Overall Auditing Objectives


98% 90%79%

30%

52%

29%

95% 89%60%

45%

45%

6%

ComplianceAssurance

EHS RiskManagement

Maintain or ImproveCompany Reputation

Meet stakeholderexpectations

Demonstratesustainable behavior

Other

2013 2015


23

What Determines Audit Frequency?Percentage Ranked as Very or Extremely Important


Manufacturers

(excluding

Chemical)

Chemical

Manufacturers

Non-

manufacturers

(excluding

Utilities)

Utilities Non-business

Type of Facility 78% 74% 78% 94% 80%

Regulatory Requirements 85% 88% 91% 100% 85%

Risk to environment or

health and safety 91% 93% 96% 100% 96%

Risk of notice of violation 73% 88% 76% 83% 92%

Severity of enforcement 62% 73% 69% 74% 77%

Nonconformance 78% 87% 81% 93% 85%

Past facility performance 81% 80% 86% 90% 92%

Past audit performance 69% 82% 81% 83% 84%

Hazard of operations 85% 84% 84% 83% 88%

Time since last audit 77% 82% 71% 80% 77%

History of violations 78% 77% 74% 83% 85%


24

Frequency of Audits by Risk of Facility


High Risk

Medium Risk

Low Risk

52%

31%

24%

22%

23%

13%

16%

31%

23%

1%

9%

31%

8%

5%

6%

2%

2%

3%

Annually Biennially Triennially less frequently than triennially not applicable no response

Note percentages have been rounded


25

Frequency of Audits by Type of Nonmanufacturing or Corporately Owned

Facility


Offices/Warehouse

Retail Stores

Supply Chain

26%

11%

19%

12%

4%

7%

19%

7%

14%

28%

10%

21%

13%

63%

35%

2%

5%

4%

Annually Biennially Triennially Less often than triennially Not applicable No response


26Bloomberg BNA/Enhesa Corporate Auditing Survey

A Look at Budgets

Survey finds improvement

0%

20%

40%

60%

80%

100%

2015 2013

Have audit budgets been established?

Yes No

0%

10%

20%

30%

40%

50%

60%

70%

2015-2016 2013-2014

Do you anticipate changes to your audit budget?

Increased Decreased

Stayed the same Don't know/Not sure

0%

10%

20%

30%

40%

50%

60%

70%

2014-2015 2012-2013

Have audit budgets changed?

Increased Decreased Stayed the same


27

Ways to Keep Costs Down


52%Integrate EHS audits

with other audits, such

as EHS and

Quality/EHS and

Management/EHS and

Financial

48%Reduce travel

time/costs

39%Combining internal,

external resources20%Outsourcing

19%Perform fewer

audits

14%Auditing only

specific

business units10%Auditing fewer

functions, jobs

or disciplines


28

Outsourcing


41%

59%

Yes

No

Reasons for outsourcing included:

63% - expertise of external auditor

52% - objectivity as factors in deciding

to outsource

40% - lack of internal resources

39% - local knowledge

10% - budgetary savings

% of respondents who cited

they outsourced


29

Global Regulatory Concerns


Regulations

Regulations

Regulations …


30

EHS & Product Regulatory Growth

Many only moderately prepared to handle


China tops

the list of

countries of

concern



Results:

During the Audit

• Who performs the audit?

• What training must they have?

31

32

People or Organizations Used to Conduct EHS Audits


69%

51%

45%

33%

11%

70%

69%

13%

4…

13%

Corporate EHS department/staff

Corporate auditing department/staff (internal audits)

Third-party consultancy

Trained external auditor

Other

2015

2013


33

Auditor Training: Experience Comparison 2015 vs. 2013


In 2015

44%: > 4years

23%: 3-4 years

21%: 1-2 years

8%: None

4%: <1

In 2013

66%: > 3years

12%: 1-2 years

11%: 2-3 years

11%: None


34

Auditor Certification Required


38% require

certification of any

auditor

88% require

certification of lead

auditors

Of those

In 2013

29% of respondents

reported requiring

certification

In 2015


35

Professional Organizations

Most joined groups among respondents

The Auditing

Roundtable was the

most joined group!


36

Tools Used to Perform EHS Audits


83%

24%

23%

18%

5%

A Corporate EHS audit protocoldeveloped by your organization

Custom audit protocol developed by auditing

consultancy (e.g., ERM, Enhesa…)

Local protocols (e.g., country, state, province, municipality…)

Off the shelf audit protocol from provider or vendor (e.g., IAPC,

Enhesa, Dakota…)

Other

The use of corporate

EHS protocol has

grown from 59% in

2013


37

Tools Used to Perform EHS Audits

0%

10%

20%

30%

40%

50%

60%

70%

Excel-basedPaper-based Web-based HandheldDevices

Tools for managing the audit

2015 2013

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

MicrosoftExcel

Internallydeveloped

syste

Auditmanagementmodule in a

softwaresystem of

other off-the-shelf

software

MicrosoftWord

MicrosoftAccess

Tools for managing audit findings/observations



Results:

After the Audit

• How are results analyzed?

• What is the report?

• Who receives the report?

38

39

Metrics Used for Scoring Facility Performance in an Audit

68%

53%49%

40%

5%

18%

27%31%

6%

11% 10%7%

Number of findings Priority findings Number of repeat findings Closure timeliness Other We do not score facilityperformance

2015 2013


40

Requirements for Closing Audits

78%

75%

69%

49%

38%

18%

18%

2%

73%

69%

22%

8%

Documentation that deficiences have been fixed

Fixing all deficiencies within a specified time

Action plan

Checking audit findings at next audit of facility

Performing a root cause analysis

Corporate agreement to make any needed capital expenditures

Independent verification

Other

2015 2013

• Larger organizations

(more than 10,000

employees) are more

likely to require

documentation that all

deficiencies have been

fixed.


41

Factors in Evaluating the Success of an Audit Program

Reduction in environmental releases or

workplace injuries

Extremely Important 49%

Very Important 40%

Improved compliance as defined by reduction in

fines and enforcement actions

Extremely Important 40%

Very Important 45%

Reduction in total number of audit findings Extremely Important 18%

Very Important 46%

Reduction in number of high-risk audit findings Extremely Important 42%

Very Important 46%

Reduction in the number of repeat findings Extremely Important 36%

Very Important 52%

High rate of closure of audit action findings Extremely Important 26%

Very Important 49%


42

Percentage of Organizations that Perform a Risk Analysis in Connection with

Audit Findings

85%

15%

76%

24%

Yes

No

2013

2015


43

Audit Reporting


44

Who Gets the Audit Reports?

75% Corporate EHS

71% Executive, Senior Management

69% Facility Management

54% Operation, Line Management

33% Legal

29% Audit Dept.

19% Board of

Directors


Global EHS Auditing

Benchmarking

Survey:

Key Takeaways

What the survey shows us about

the state of Auditing in 2015 and

beyond?

45

46

Key Takeaways


Organizations use audits for EHS compliance

Almost all base audits on corporate EHS standards and/or national laws and regulations

Organizations are including more topics in audits compared with 2013 survey

Most companies use internal auditors

More organizations are requiring certification for auditors, especially lead auditors

Budgets actually increasing


47

How to Gain Access to the Full Report?


The full report will be

available early 2016

Request a copy of the executive

summary when you complete the

brief feedback survey at the end

of the webinar.

List Price: $795(*Members of the

Auditing Roundtable

are eligible for a

discount)


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